Initial Start-up costs

[Ryan Zielinski]

I'm posting to see what everyone's thoughts are on getting that first deal done. I currently own a single family home, which I purchased almost 4 years ago. At the time of purchase, I was on the hunt for a duplex or triplex but was continually outbid with stronger offers. This house has been great to my family, but unfortunately hasn't brought the passive income value I was originally looking for. 

Buying an investment property now has it's challenges because of the 20% or even 25% down payment that is required. I've inquired on a Home Equity Loan on my single family residence, for that initial down payment. I'm sure there are plenty of experienced investors that have started out this way. How was your experience if you started out like that? 

Is there a suggestion of whether you'd do it again, or if you would look for an alternative route? 

Any advice would be appreciated!

Thanks,

Ryan

[Bryce Jamison]

Hi Ryan,

I personally use a slow and steady, more conservative, approach that I don't see/hear many people talk about or advocate. I saved up money until I had the 25% needed to my first investment property. Yes, I could have pulled cash out of my primary residence, but I like the security of knowing I'm not risking my home (I used to listen to a lot of Dave Ramsey). Fortunately we're starting to see the market shift giving buyers more power. Try looking for homes that have been on the market 30+ days, or homes that were under contract and are now back on the market. There's deals to be had as some sellers become scared they won't sell they're property before more price adjustments come. Now I'm saving up for my next 25% down payment. I'm using the several months it'll take me to save this up to immerse myself in my local MLS to try to know the market better than anyone else in the area, educate myself, meet and talk to other local investors, and hang out on BP.

Sure this is a much slower approach, but I'm okay with being the tortoise over the hare (my Dave Ramsey showing again).